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Jan Friedrich Kallmorgen is the founder and CEO of Berlin Global Advisors (BGA). He advises international clients on geopolitical and foreign policy issues as they affect business strategies, transactions and capital markets. Jan Friedrich Kallmorgen previously worked for Goldman Sachs, among others. He also worked for the World Bank and the German Council on Foreign Relations. He founded the non-profit think tank Atlantische Initiative and is a member of the American Chamber of Commerce in Germany, the Atlantikbrücke and the CDU Economic Council.

Looking back: What legacy will Joe Biden take over from President Donald Trump?

• Within the US, Joe Biden is taking on a society divided by antagonism and hostility along political lines - more so than ever since Donald Trump.
• In terms of foreign policy, one of the USA's greatest strengths - the strategic alliances and multilateral organizations it has built up since 1945 - has been permanently weakened by Trump's abrasive political style.
• Trump's foreign policy accelerated the USA's long-held desire to withdraw from the world - including militarily, for example from Afghanistan.

Looking ahead: What agenda is Joe Biden pursuing in the USA?

• Domestic policy will be given much more attention, especially at the beginning, not least due to the predicaments: Covid 19 and the general instability with regard to domestic politics, the economy and the social system.
• Joe Biden will devote himself to the three H's: Healing (of society), Humbleness (style of politics) and Holistic (way of decision making).
• He is supported by an experienced and demonstrably competent team of safe hands (Tony Blinken, Janet Yellen, John Kerry, etc.).
• In general, Joe Biden will try to make politics more predictable and calculable through institutionalization.
• In economic terms, increased government investment programs and postponed private consumption, supported by a benevolent monetary policy, should lead to rising corporate profits, which should result in rising share prices despite possible higher tax burdens.
• German companies will also benefit from this, as they will be confronted with fewer uncertainties, for example with regard to tariffs, thanks to a consensus-oriented political style, despite continuing political transatlantic differences.

Looking to China: will there be another turnaround in relations or has the situation deteriorated irreversibly?

• For some years now, a bipartisan consensus has formed in the US that defines China as a systemic rival centered around the four dimensions: 1. economy (trade, investment restrictions, New Silk Road), 2. political values (Hong Kong, Uyghurs, human rights, welfare state), 3. security (potential armed conflict in the South China Sea, Taiwan) and 4. technology ("GeoTech", supremacy in future technologies, etc.), which could even lead to a bifurcation of the Internet
• A division of the world into two camps - China and the USA (G2) - seems realistic.
• In economic terms, technical competition could also have a stimulating effect, as competition accelerates progress. Especially in Europe, which has to reorient itself between the two blocs.
• At the same time, cooperation between China and the USA also opens up new opportunities (issues ranging from environmental protection and combating pandemics to weapons of mass destruction).
• Corporate governance remains very poor in China and will damage the domestic stock market. In both countries, increased spending on armaments could hinder long-term development.
• While companies from non-technology sectors (e.g. the white goods industry or consumer goods in general) can presumably continue to operate freely, technology companies in the broader sense (manufacturers, suppliers and users) could be forced to decide to position themselves between the rival markets.
• Companies that are highly dependent on the Chinese market in particular could face very difficult make-or-break decisions.
• Europe's greater export orientation, especially in Germany, and the associated greater dependence on China, means that Europe's attitude towards China (economic and trade-oriented) differs fundamentally from the positioning of the USA (strategic, competitive).

Looking to Europe: What goals are being pursued in transatlantic relations and with Germany?

• The USA's foreign policy goal is to revive the old American claim to leadership among the democratic states. There could be a grand bargain between Europe and the USA, which on the one hand includes a clear commitment to NATO, including investments in defense budgets, and on the other hand ensures full support for European integration. To achieve this, however, Europe must actually assume geopolitical responsibility.
• The tacit approval of the fiscal union from Germany, which manifests itself, for example, in the debt facility, which would not have been enforceable some time ago, can be seen as an indication that this path is being pursued.
• The realization within Europe that without further (fiscal) integration, Europe will be marginalized and lose its own sovereignty has only been triggered by the geopolitical predicament.
• A Europeanization of the US economic structure - more welfare state, more infrastructure, higher taxes and higher national debt - reduces the differences between the two regions and facilitates the politically necessary alliance.
• The risks associated with China could possibly be compensated for by Europe and the USA growing closer together and possibly the introduction of TTIP.

A look at German entrepreneurs and investors: What recommendations for action can be derived for German entrepreneurs and investors?

• German entrepreneurs must recalibrate themselves in the changed geopolitical conditions of a G2 world along the following dimensions: 1. diversification of value chains (R&D, data centers out of China), 2. higher costs due to the establishment of additional supply chains, 3. avoid US sanctions (technology sector, Chinese investors) and 4. adapt their own China strategy (ring-fencing, possibly abandoning the US market).
• Private investors should observe a sector rotation from technology companies to old economy companies, which are primarily based in Europe. The latter should benefit from the improved predictability following the erratic Trump era.
• Interest rates will remain very low for a very long time, as government debt, the real estate sector, etc. do not allow higher interest rates.
• Despite low economic growth, equity investments (shares and private equity) can still achieve high single-digit returns. This is because performance depends on good corporate governance in countries and companies, but not on changes in economic performance. This results in the preferred regions: Europe and the USA, but not China.
• Further opportunities could arise in Asian real estate outside China, which could benefit from a reorganization of supply chains.